An advanced Western Australian vanadium player may have found another international suitor to assist it down the path towards production.
Earlier this month EKF Denmark’s Export Credit Agency (ECA) issued a Letter of Interest (LOL) ‒ including high level terms for potential Danish ECA financing support ‒ for the development of Technology Metals Ltd’s $604 million Murchison Technology Metals Project (MTMP) some 50 kilometres south of Meekatharra in WA’s Mid West.
This followed the signing of a Memorandum of Understanding (MOU) with India’s Tata Steel Ltd during the 2022 December quarter to discuss potential off-take arrangements for MTMP’s production, downstream vanadium processing infrastructure development options as well as possible financing solutions for the project’s advancement.
The MTMP “straddles” what broker MST Access said were two of the world’s leading undeveloped vanadium deposits ‒ Gabanintha and Yarrabubba – which sit 15km apart.
Importantly, both ore bodies are on granted mining leases.
“It has a high grade vanadium resource, recoverable ilmenite credits at Yarrabubba, and first quartile operating costs,” MST said when it initiated coverage on Technology Metals back in November last year.
The MTMP is being developed to be a stable, secure, long term supplier of critical minerals, with targeted average vanadium production of around 12,500 tonnes per annum (or 27.5 million pounds pa) of vanadium pentoxide (V2O5) over an initial 25 year mine life, as well as the production of a highly sought after titanium (ilmenite) by-product whilst mining and processing ore from Yarrabubba.
A recent global Mineral Resource Estimate (MRE) upgrade for the project outlined 153.7 million tonnes at 0.8% V2O5 inclusive of a Measured and Indicated MRE of 63.2Mt at 0.9% V2O5, which is expected to support an increase of the current mine life.
The EKF LOL contemplates financing support of around $150 million subject to, among other things, sufficient Danish economic interest in the MTMP, approvals, satisfactory documentation and customary due diligence.
As part of the deal EKF has provided non-binding indicative terms based on expected Danish content from the involvement of the Denmark-based FLSmidth, Technology Metals’ current key equipment supplier.
The WA-based junior said it was “progressing discussions” with the international outfit regarding the supply of various key equipment items ‒ including the roasting kiln section.
In addition, it pointed out, EFK had been involved in the financing of a significant number of transactions and projects all over the world, giving it extensive experience within the field of export and project finance.
When it comes to the MOU with Tata, Technology Metals indicated it appeared to be the first agreement of its kind globally given such a large end-user of vanadium feedstock had sought to engage directly with a potential supplier of primary product, prompting Sydney-based Bridge Street Capital Partners to note: “While these agreements have been increasingly evident in other critical/battery minerals projects, we believe the critical role vanadium has to play in decarbonisation and renewable energy infrastructure development has thus far been overlooked by equity markets.”
Although the main use of vanadium is in the steel industry (where it is primarily utilised in metal alloys such as rebar and structural steel, high-speed tools, titanium alloys and aircraft), a significant emerging market for the critical mineral is the rapidly developing energy storage (battery) sector with its expanding use, and increasing penetration, of vanadium redox flow batteries (VRFBs).
VRFBs are a rechargeable flow battery which uses vanadium in different oxidation states to store energy, utilising its unique ability to exist in solution in four different oxidation states.
Ultimately, having the ability to time-shift large amounts of previously generated energy for later use (making it ideally suited for both micro-grid and large scale energy storage solutions), these batteries provide an efficient storage and re-supply solution for renewable energy.
Not surprisingly VRFBs are becoming increasingly popular given their suitability for integration with renewable energy infrastructure, and currently account for 5 per cent of global vanadium demand.
Another important consideration to take on board when it comes to vanadium is the fact it has been deemed a critical mineral by both the US Department of Interior and the European Commission, highlighting its strategic importance in essential manufacturing within these jurisdictions.
Furthermore, geopolitical issues have come to the fore when it comes to the vanadium market. As Bridge Capital points out: “In light of recent dislocation in global commodities supply chains related to the Russia/Ukraine war (Russia is the second largest vanadium producer after China), and concentration of global vanadium supply in high risk countries, MTMP’s long mine life (25 years) and location in WA provide strong tailwinds for strategic engagement with concerned downstream industrial customers where vanadium is a critical input.”
